Real Money

Plains All American Pipeline, L.P.

Plains All American Pipeline, L.P. (NYSE: PAA) today reported net income attributable to Plains of $378 million, or $1.85 per diluted limited partner unit, for the second quarter of 2012 as compared to $225 million, or $1.13 per diluted limited partner unit for the second quarter of 2011. The Partnership reported earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $557 million for the second quarter of 2012, compared to reported EBITDA of $367 million for the second quarter of 2011.

The Partnership’s reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results, as detailed in the table below. Accordingly, the Partnership’s second-quarter 2012 adjusted net income attributable to Plains, adjusted net income per diluted limited partner unit and adjusted EBITDA were $343 million, $1.64 and $522 million, respectively. The comparable amounts for the second-quarter of 2011 were $224 million, $1.12 and $366 million. (See the section of this release entitled “Non-GAAP Financial Measures” and the attached tables for discussion of EBITDA and other non-GAAP financial measures and their reconciliation to the most directly comparable GAAP measures.)

“PAA delivered outstanding second-quarter results with all three segments delivering strong performance,” said Greg L. Armstrong, Chairman and CEO of Plains All American. “These results are reflective of PAA’s strategically located assets, proven business model and solid execution during favorable market conditions.”

Armstrong added, “Our distribution payable next week represents an 8.4% increase over last year’s August distribution and we remain on track to increase our distribution by 8-9% during 2012. Demand for our assets and services remains strong and we have good visibility for continued growth. We have completed over $3 billion of acquisitions since the beginning of 2011, and we are on track to execute over $1 billion of organic growth projects during 2012. Additionally , PAA ended the quarter with a strong balance sheet, $2.8 billion of committed liquidity and favorably positioned with respect to each of its targeted credit metrics.”

The following table summarizes selected items that the Partnership believes impact comparability of financial results between reporting periods (amounts in millions, except per unit amounts):

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Selected Items Impacting Comparability - Income / (Loss) (1):

Inventory valuation adjustments net of gains from related

derivative activities (2)

$

(5

)

$

-

$

(5

)

$

-

Gains from other derivative activities (2)

77

21

18

41

Equity compensation expense (3)

(12

)

(20

)

(38

)

(33

)

Net loss on early repayment of senior notes

-

-

-

(23

)

Net loss on foreign currency revaluation

(16

)

-

(16

)

-

Significant acquisition-related expenses

(9

)

-

(13

)

(4

)

Other (4)

-

-

-

1

Selected items impacting comparability of net income attributable to Plains

$

35

$

1

$

(54

)

$

(18

)

Less: GP 2% portion of selected items impacting comparability

(1

)

-

1

-

Limited partners' 98% of selected items impacting comparability

$

34

$

1

$

(53

)

$

(18

)

Impact to basic net income per limited partner unit

$

0.21

$

0.02

$

(0.33

)

$

(0.12

)

Impact to diluted net income per limited partner unit

$

0.21

$

0.01

$

(0.33

)

$

(0.12

)

(1)

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2)

Gains from derivative activities related to revalued inventory are included in the line item "Inventory valuation adjustments net of gains from related derivative activities;" gains from derivative activities not related to revalued inventory are included in the line item "Gains from other derivative activities."

(3)

Equity compensation expense for the three and six months ended June 30, 2012 and 2011 excludes the portion of equity compensation expense represented by grants under our Long-term Incentive Plans ("LTIPs") that, pursuant to the terms of the grant, will be settled in cash only and have no impact on diluted units.

(4)

Includes other immaterial selected items impacting comparability, as well as the noncontrolling interests' portion of selected items.

The following tables present certain selected financial information by segment for the second quarter (amounts in millions):

Three Months Ended

Three Months Ended

June 30, 2012

June 30, 2011

Supply and

Supply and

Transportation

Facilities

Logistics

Transportation

Facilities

Logistics

Revenues (1)

$

361

$

287

$

9,442

$

290

$

164

$

8,586

Purchases and related costs (1)

(35

)

(65

)

(9,030

)

(31

)

(20

)

(8,330

)

Field operating costs (excluding equity compensation expense) (1)

(128

)

(86

)

(105

)

(106

)

(43

)

(73

)

Equity compensation expense - operations

(3

)

-

(1

)

(2

)

-

(1

)

Segment G&A expenses (excluding equity compensation expense) (2)

(28

)

(18

)

(27

)

(16

)

(10

)

(23

)

Equity compensation expense - general and administrative

(7

)

(4

)

(5

)

(11

)

(5

)

(8

)

Equity earnings in unconsolidated entities

9

-

-

4

-

-

Reported segment profit

$

169

$

114

$

274

$

128

$

86

$

151

Selected items impacting comparability of segment profit (3)

11

5

(53

)

9

5

(15

)

Segment profit excluding selected items impacting comparability

$

180

$

119

$

221

$

137

$

91

$

136

Maintenance capital

$

27

$

10

$

3

$

17

$

7

$

3

Six Months Ended

Six Months Ended

June 30, 2012

June 30, 2011

Supply and

Supply and

Transportation

Facilities

Logistics

Transportation

Facilities

Logistics

Revenues (1)

$

678

$

523

$

18,319

$

564

$

325

$

16,022

Purchases and related costs (1)

(63

)

(139

)

(17,638

)

(54

)

(43

)

(15,535

)

Field operating costs (excluding equity compensation expense) (1)

(224

)

(133

)

(207

)

(196

)

(83

)

(141

)

Equity compensation expense - operations

(10

)

(1

)

(1

)

(5

)

(1

)

(1

)

Segment G&A expenses (excluding equity compensation expense) (2)

(49

)

(32

)

(53

)

(32

)

(25

)

(47

)

Equity compensation expense - general and administrative

(16

)

(14

)

(18

)

(17

)

(9

)

(13

)

Equity earnings in unconsolidated entities

16

-

-

5

-

-

Reported segment profit

$

332

$

204

$

402

$

265

$

164

$

285

Selected items impacting comparability of segment profit (3)

21

15

17

15

13

(32

)

Segment profit excluding selected items impacting comparability

$

353

$

219

$

419

$

280

$

177

$

253

Maintenance capital

$

52

$

17

$

7

$

35

$

10

$

7

(1)

Includes intersegment amounts.

(2)

Segment general and administrative expenses (G&A) reflect direct costs attributable to each segment and an allocation of other expenses to the segments based on the business activities that existed at that time. The proportional allocations by segment require judgment by management and will continue to be based on the business activities that exist during each period. Includes acquisition-related expenses for both the 2012 and 2011 periods.

(3)

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

Adjusted Transportation segment profit for the second quarter of 2012 increased by 31% over comparable 2011 results. This increase was primarily driven by acquisitions completed in late 2011 and early 2012 and higher average pipeline tariffs and volumes.